But the Trump administration, along with state officials, argued that requiring some recipients to work will strengthen the overall health insurance program.

WASHINGTON — A judge who last year struck down a state plan to require some Medicaid recipients work to receive insurance coverage heard Thursday from advocates arguing the harmful ramifications can already be seen in Arkansas, while the Trump administration defended the work mandate as making the program more sustainable.

During oral arguments before U.S. District Court Judge James Boasberg, attorney Ian Gershengorn, who is representing Medicaid recipients in two states, said under Arkansas’ new policy about 18,000 recipients lost their health insurance in the first five months with only 1,500 reapplying this year due to the reporting burdens.

The U.S. Department of Health and Human Services actually allowed Kentucky to move forward with work requirements first, but Boasberg last June stopped the state plan, saying HHS did not properly consider how requiring work would fit with Medicaid’s goal of providing coverage.

Changes to Kentucky’s waiver were made before its re-approval late last year, but Gershengorn said the “cookie-cutter waivers” in both states are part of HHS Secretary Alex Azar’s stated effort to fundamentally transform Medicaid—by cutting the program.

“This wolf comes dressed as a wolf,” Gershengorn, who represents the National Health Law Program, said in court. “They did exactly what they said they would do.”

James Burnham, a U.S. Justice Department attorney, argued HHS made a predictive judgment with Arkansas’ waiver request that work requirements would not lead to significant coverage losses.

The requirements are meant to make people’s lives better by freeing up funds for other health services like vision, dental and substance abuse treatment, Burnham said, and delaying them would force state officials to “start over from square one” educating the public on Medicaid expansion.

On April 1, Arkansas will begin requiring 19 to 29 year olds to begin complying with work requirements—conceivably triggering another wave of people being kicked off health coverage, Gershengorn said. In Arkansas, adult Medicaid recipients who don’t have dependents, and the state deems “able-bodied,” are required to work or volunteer at least 80 hours a month, or they can attend school or a training program. They are also required to log their hours with the state, typically online, which critics have said is a burden on poor residents who often lack reliable internet service.

In Kentucky’s case, Gov. Matt Bevin complicated matters by issuing an executive order in 2018 that would end Medicaid expansion in the state if any part of its waiver is struck down. An estimated 95,000 recipients would lose coverage with Kentucky’s work requirements compared to 454,000 if expansion goes away entirely, Burnham said.

“That’s a pretty easy choice for the secretary,” he said.

If Kentucky’s demonstration project is allowed to run, coverage could balance out in time, Burnham added.

Gershengorn questioned whether the state could even reverse its expansion because of a statute mandating federal matching funds for health services be accepted.

Matthew Kuhn, Bevin’s deputy general counsel, said that in recrafting the waiver Azar worked “tirelessly” to mitigate the anticipated 95,000 people losing coverage by allowing Medicaid recipients to make up missed “community engagement” requirements the following month.

“Sustainability has to be an objective of Medicaid,” Kuhn said.

Boasberg said he’d attempt to issue a joint ruling before April 1, when the second part of Arkansas’ waiver goes into effect.

If Boasberg sides with the Arkansas plaintiffs, DOJ argued a ruling should be limited to the named plaintiffs, but Gershengorn said that could result in the same case being brought forward repeatedly by different recipients. The rule should be vacated, he said.

Boasberg could also remand Kentucky again, at which point HHS could revise the waiver a second time or simply appeal the ruling.

The National Health Law Program, Legal Aid of Arkansas and Southern Poverty Law Center allowed Arkansas’ waiver to play out without a pre-emptive legal challenge to see what would happen, but the results to date are a sign of what to expect in Kentucky, Gershengorn said. Still, Boasberg could find Arkansas’ waiver in violation of federal law and not Kentucky’s.

“The two cases don’t necessarily rise and fall together. I think if Kentucky falls, then Arkansas certainly falls, but the whole point of the waiver process is that the secretary is supposed to be doing individualized considerations state by state,” Gershengorn said. “He’s not supposed to be doing nationwide work requirements.”

Dave Nyczepir is a News Editor at Route Fifty and is based in Washington, D.C.